Vendor Central vs Seller Central in 2020: What’s best for your brand?
What is the difference between Amazon Vendor Central and Amazon Seller Central?
When you’re set with a solid product and the capabilities to manufacture it, the challenge of choosing the best channel to sell through tends to present itself. Even when you’ve narrowed it down to Amazon, the two main options, Amazon Vendor Central and Amazon Seller Central, can at first glance appear relatively similar. Yet, they’re equipped with the capabilities to suit some parties better than others. As a seller, it’s important to recognize whether you’ll be most successful through the Amazon Seller Central or Amazon Vendor Central model.
What is Amazon Seller Central?
Amazon Seller Central is when you act as a retailer, selling directly to the customer through the Amazon platform. It’s a Business-to-Consumer (B2C) route where you become a part of the marketplace eco-system as a third-party Amazon seller. This gives you full control of the marketing and fulfillment process, but can also require lots of time and responsibility to execute properly.
Sellers can choose to alleviate some of the work by using a third-party logistics provider (3PL) or take advantage of the Amazon FBA program. Amazon FBA which stands for Fulfillment by Amazon, gives you the ability to instead send your products to Amazon where they thereafter, deal with the packing, shipping, and tracking of the orders.
What is Amazon Vendor Central?
Amazon Vendor Central is where you essentially take on the role as a manufacturer, wholesaler, and distributor. It’s a parallel to Amazon Seller Central, and instead consists of choosing to use the Business-To-Business route (B2B). You sell and supply your product to Amazon and they deal with the rest. With Amazon Vendor Central your product becomes one of the select items with the phrase “ships from and sold by Amazon” highlighted on the ordering page.
This is through invite-only, Amazon becomes aware of the attraction your product is gaining when you’re using Amazon Seller Central and extends the opportunity thereafter to pursue vendor central fulfillment. Using Amazon Seller Central, to reach this milestone, you’ll want to achieve a large sales volume and establish yourself as a top-seller in the relevant product categories you’re listed under. It is important to note that thereafter, strong vendor central fulfillment processes need to be in place when joining Amazon Vendor Central.
How can I tell if a product is FBA or Seller Fulfilled Prime?
To the typical Amazon Prime subscriber, it’s not obvious why a particular product has the Prime badge. But shoppers have little reason to care. They have learned what Prime means and that they can always expect the same level of service.
There are now three ways a product can qualify for Prime, which are:
- Sold by Amazon
- Sold by a third-party seller, but fulfilled via FBA
- Sold by a third-party seller who has qualified for SFP
On the product detail page, you can tell why a particular product has the Prime badge – if you know what to look for.
All the Buy Box examples below include the Prime badge, but for different reasons. Highlighting has been added.
The product on the left says “Ships from and sold by Amazon”. This qualifies for the Prime badge because Amazon is the seller.
On the right is a product “Sold by Eastfield Co and Fulfilled by Amazon”. This is a third-party seller but it qualifies for Prime because they are using FBA.
How do I know whether I should use Amazon Seller Central of Vendor Central?
Both Amazon Seller and Amazon Vendor Central comes with its own set of advantages and disadvantages, as a seller you want to recognize which one best aligns with your businesses current and future needs.
Why choose Amazon Seller Central?
- Increased Control
- With Amazon Seller Central, you have the ability to directly control your pricing strategies, marketing and communications with customers and fulfillment processes. If you have the time and flexibility, this can be extremely beneficial and help you better meet the needs of your customer base. Furthermore, if this does become overwhelming, some of the responsibility can be alleviated through Amazon FBA. They will deal with any customer service and return issues, giving you the opportunity to focus on other vital operations.
- Potential for Higher Profit Margins
- With the ability to control your pricing strategies, you can directly positively impact your potential profit margins. Moreover, with an efficient fulfillment process, this can further be enhanced. Amazon Seller Central can also help your business make the price unanimous across all platforms you sell through, making your partners happy.
- Get Valuable Consumer Data
- Amazon sellers can choose to purchase a monthly Professional Seller Account which comes with various analytic tools and even, preferential marketing treatment on the platform. This is not available to customers with Amazon Vendor Central. If you’re not interested in adding any purchases, the free version comes equipped with consumer data, that will help you better understand your customer and the emerging trends in the marketplace.
Why choose Amazon Vendor Central?
- Name Recognition
- The variety of choice on Amazon can be overwhelming for many buyers, that’s where the main benefit of Amazon Vendor Central becomes most apparent. The ability to be recognized as an Amazon Vendor gives consumers confidence in your product which can ultimately, result in increased sales and better placement on the relevant product landing pages. With a strong vendor central fulfillment process, Amazon Vendor Central users can be left ensured that their products will arrive in a timely manner to all their customers.
- Seller Support
- When you use Amazon Vendor Central, your company is able to significantly simplify its operations, focusing on one main large buyer instead of thousands of individual ones. Furthermore, through Amazon’s Seller Support, representatives are reachable to help you navigate any issues they can assist you with. The ordering process becomes automated and you can expect frequent small orders coming in. In addition, oftentimes companies that assist with vendor central fulfillment will also supply you with relevant analytics to improve turnover.
- Amazon Marketing Services
- This is a built-in feature, available to your company when you choose to use Amazon Vendor Central. Expect increased advertising within the website, such as headline search ads or product display ads. With Amazon Vendor Central, you can increase your traffic and ultimately, your sales revenue with the assistance of Amazon’s preferential marketing tool.
The Drawbacks of Amazon Seller Central and Amazon Vendor Central
Although both options, have many attractive qualities, they’re not a one size fits all solution. Be sure to consider the disadvantages listed below to ensure your success on the platform.
Why might I not want to pursue Amazon Seller Central?
- Fulfillment Costs
- If you choose to use Amazon FBA, the costs can quickly add up. Amazon FBA charges customers for the weight and size of the product which has a relatively costly starting point. This can severely impact your potential profit, making it more difficult to increase your profit margin without raising the price. Make sure to calculate the potential margin on your product and all relevant costs associated with Amazon FBA beforehand.
- Managing your Marketing and Communications
- Although this was briefly touched upon as an advantage, it can be extremely difficult to manage without the proper resources and knowledge in place. Controlling and monitoring all your communication channels such as product descriptions or customer reviews, is a time-consuming task to take on. Make sure you’re prepared for the work that comes with it in order to maintain a strong relationship with your end-users.
Why might I not want to pursue Amazon Vendor Central?
- Limited Flexibility
- With Amazon Vendor Central, you relinquish control of the pricing of your products to Amazon. This has in the past lead to decreased margins for potential users if their supply chain, manufacturing and vendor central fulfillment capabilities aren’t fully optimized. Services such as AMZ prep, are designed to make this vendor central fulfillment experience as seamless as possible and help you save costs.
- Increased Risk
- Using Amazon Vendor Central one has to rely on a single buyer which can be inherently risky. In the situation that Amazon decides to cut ties with your product, you will have to quickly establish a new customer base or return to Amazon Seller Central. Make sure to diversify your sales channels in order to minimize your potential risk before pursuing the Amazon Vendor Central path. Read more about Amazon previously dropping vendor’s using Amazon Vendor Central here.
What’s our Final Verdict?
Ultimately, it truly depends on your distribution means, business model, and strategic objectives. Make sure to consider how the choice will impact all the relevant functions within your business and the possible changes you may need to make in anticipation of it. E-commerce may seem overwhelming at first, but the possibilities are truly endless. If you have questions on which to decide, connect with our team to chat regarding how AMZ can help sellers leverage both Vendors Central or Seller Central with their fulfillment execution.